Senate Defeats Durbin Bankruptcy Judge Mortgage Modification Amendment to Save Homes Act

Senators have defeated an amendment offered by Senator Dick Durbin (D-IL) to the Helping Families Save Their Homes Act (S. 896) by a vote of 45 to 51.  It was subject to a 60-vote threshold.

This is the so-called “cramdown” amendment which would allow bankruptcy judges to modify mortgage terms for struggling homeowners.  Per C-SPAN, the modification option would be made available to those mortgage loans under $729,000.

It would also require borrowers to contact loan servicers 45 days before filing for bankruptcy.  That would be done in an effort to work out a new agreement without going to a judge.

Bloomberg notes that defeat of this amendment was expected after “major U.S. banks broke off talks on a compromise.”  That led several moderate Democrats to oppose it.

Senate Richard Durbin of Illinois, sponsor of so-called cram-down legislation, said today “months and months of heroic efforts” with banks and credit unions succeeded in winning one industry supporter: New York-based Citigroup Inc.

“I can’t tell you how many banks have walked away,” Durbin, the Senate’s second-ranking Democrat, said as debate began on the measure, which would amend a housing bill.

No Republican members voted for the amendment. The Democrat no votes include Senators Max Baucus (D-MT), Michael Bennet (D-CO), Robert Byrd (D-WV), Tom Carper (D-DE), Byron Dorgan (D-ND), Tim Johnson (D-SD), Mary Landrieu (D-LA), Blanche Lincoln (D-AR), Ben Nelson (D-NE), Mark Pryor (D-AR), Arlen Specter (D-PA) & John Tester (D-MT).

Per an agreement reached yesterday, no other “cramdown” related amendments can be offered on this bill.

7 Comments

Filed under Housing

7 responses to “Senate Defeats Durbin Bankruptcy Judge Mortgage Modification Amendment to Save Homes Act

  1. Mei-ling Albert

    I deeply admire Sen Durbin for standing up for ordinary citizens. I am outraged by all the Democratic senators who voted against the mortgage amendment, succumbing to pressure from the banks that caused this mess. And of course all the Republicans, but what can you expect from them.

    I’m sickened that Congress gave the banks so much money and yet the banks are unwilling to give anything, and Congress is backing them in their continued immorality and unethical actions.

    I want banking leaders held accountable for the pain they have caused so many throughout the whole economy as they glutted themselves. The Senate deserves a powerful kick in the pants for enabling them to continue to bow down before the gods of money.

  2. Yeah, I think it can help the industry a lot. Thanks.

  3. David

    Having filed Bankruptcy last year it would have been a smooth process to address the unbalanced mortgage payment requirements that caused the bankruptcy.

    People can’t pay their bills, they have a choice pay their mortgage or everything else.

    We have chosen to pay our mortgage and to borrow and withdraw from every source imaginable to pay our bills.

    We have lost the income of 1 parent due to illness so the other parent needed to become the care giver of 1 adult and two children and work full time and at times a full time and part time job.

    We have missed two mortgage payments and are awaiting notice from the bank regarding foreclosure.

    We have no where to go, our children are fully engaged in the school system and are getting strait A’s for the most part.

    This situation is completely upside down whereby we can bail out huge corporations to no real effect for the economy or the benefit of all.

    The bottom up approach is best.

    Re-value all property to today’s value. issue a regulation that all mortgages, currently or prospectively in trouble have their principle reset to 75% of today’s value. Reset all rates to 6% interest or lower/ no higher on all of those loans and forgive up to three months of payments.

    Pass this law, rule or regulation and that will turn the economy around overnight.

    Thank you for listening, don’t forget us…

    • Johanna

      Hello David-
      I saw your comments from last year regarding your situation. People need to be helped before the country’s state is healed. Have you been able to get the help you need?

  4. I always like reading your blog! Another good solid article and a great help to many people!

  5. Fascinating article, well thought of and well written with some very good advice in!

  6. What a great idea, seems they don’t always go anywhere huh? It is quite a fiasco when forclosed properties are going to be liquidated for around 40 to 60 percent of the home value, but amending a mortgage doesn’t seem a good option?

    I will never understand.

    Thanks.

    Joe w/ michigan bankruptcy

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